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  • richard evans

GBP falls on weak data

Good morning

GBP has had a shift lower this morning after weak confidence data overnight and disappointing retail sales numbers this morning. GBPUSD is down at 1.2910, lowest levels since Nov 2020. There is an element of US dollar strength in this as well, after Feds Powell signalled a 50bps rate rise in May and a major Japanese bank said it believes two 75bps rises would follow a 50bps rise in May. Not all GBP losses are down to the US dollar, it also loses ground against EUR, with EURGBP now 0.8375 (GBPEUR 1.1940).

There is a suggestion that BoE will fail to match market rate expectations, which is compounding GBP weakness, while of course we also have the small issue of whether Boris Johnson will be forced to resign. On top of all that I see that there is talk the government is looking at a potential confrontation with Europe over the Northern Ireland Brexit deal. BoEs Bailey speaks today and I’d imagine he will again talk about the downside risks which is unlikely to give GBP a great deal of support. Yesterday he mentioned the fine line between dealing with inflation risks and avoiding the risk of recession. A tough job indeed.

USD was higher against CNY again, the pair trading up at 6.4700 having fixed at 6.4596, still a reflection of the difference between Fed and PBoC policy. USDJPY has slipped off its highs after reports that Japan FinMin Suzuki and US TrsSec Yellen discussed did joint intervention even though other reports suggest there was no disagreement over the weakness of yen. UDSJPY 128.10, EURJPY 138.50, GBPJPY down at 165.55.

On Sunday we have the French election, Macron remains the firm favourite and it will be a real shock should Le Pen turn this around. We have seen stranger things mind you. Still looking at short dated downside EURUSD options just in case. Bit of a lottery ticket trade for speculators, or a sensible bit of hedging for those at risk of a shift lower in EUR.

Elsewhere in the news, the tech geek in me is drawn to news that the large Hadron Collider, which is 100m under the French>Swiss border, spanning some 8.5km, is being revamped and will be more powerful than ever, meaning it has a greater chance of finding particles that are new to science, perhaps even finding an as yet unknown force of nature to go alongside gravity, magnetism, and two nuclear forces. Exciting stuff. Not only that but the James Webb telescope is nearer to operating temperatures although still requires more cooling.

Before all that, we have a weekend to look forward to. Not sure it‘ll be quite as hot and sunny as the weather we enjoyed last weekend, but reasonably mild. My U15s return to action in a league match against some local rivals. We still have twelve matches to play before the end of May and with cup commitments we really only have four week to week them in. The latest fixtures from the league have us playing some Wednesday and Friday evenings as well as some double-headers. It will be something of a miracle if we get them all played but with the league title well within reach, we’ll do our best.

Have a great weekend.

- 09.00 EU S&P PMIs

- 09.30 UK S&P PMIs

- 11.00 German Buba monthly report

- 13.30 CAD retail sales

- 14.00 ECBs Lagarde speaks

- 14.45 US S&P PMIs

- 15.30 BoEs Bailey speaks

- 20.30 CFTC position data

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